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World stocks lose steam on weak German growth
World stocks lose steam after German economy stalls in second quarter
By The Associated Press

BANGKOK (AP) ' World stock markets lost steam Tuesday after Germany's economic growth came to a near-standstill in the second quarter, adding to fears that the global economy is slowing down.

Oil prices hovered near $87 a barrel in Asia. The dollar was higher against the yen and the euro.

European shares tumbled in early trading after data showed that Germany ' Europe's biggest economy ' grew just 0.1 percent in the second quarter, sharply below expectations. Britain's FTSE 100 fell 1.4 percent to 5,275.73. Germany's DAX dropped 2.6 percent to 5,866.26 and France's CAC-40 lost 2.2 percent to 3,168.14.

Wall Street was also headed for a lower opening, with Dow Jones industrial futures down 1 percent to 11,293 and S&P 500 futures down 1.3 percent at 1,182.30.

The U.S. economy also is growing at a far slower rate than previously thought. The Federal Reserve last week decided to keep interest rates extremely low for two more years, saying it expected the economy to remain weak for that period.

Meanwhile, figures Monday showed Japan's economy contracted further in the second quarter in the wake of March's devastating earthquake and tsunami.

Earlier in the day, Asian shares traded higher on the heels of a round of corporate deals in the U.S. that lifted Wall Street higher on Monday.

Japan's Nikkei 225 index rose 0.2 percent to close at 9,107.43. South Korea's Kospi jumped 4.8 percent to 1,879.87 following a public holiday, with steelmaker POSCO soaring 7.4 percent. Benchmarks in the Philippines, Malaysia and New Zealand were also higher.

Hong Kong's Hang Seng lost 0.2 percent to 20,212.08. Australia's S&P/ASX 200 slipped 0.8 percent to 4,247.30 as Westpac Banking Corp. tumbled 4.4 percent and dragged down other financials. Australian flagship carrier Qantas Airways dipped 0.3 percent after it announced plans to cut up to 1,000 jobs as part of a major shake-up of its international business.

Mainland Chinese shares snapped a five-session winning streak as investors cashed in on recent gains.

The Shanghai Composite Index lost 0.7 percent to 2,608.17 and the Shenzhen Composite Index lost 0.7 percent to 1,166.84.

"The market might be just correcting after investors think things over, but the loss today after yesterday's gain means there is no strong momentum of support," said Yang Yining, an analyst at Capital-edge Investment & Management Co. in Shanghai.

Asian technology shares got a boost from news that Google is buying wireless phone maker Motorola Mobility for $12.5 billion in cash ' the largest deal ever for Google. Japanese memory chip maker Elpida Memory Inc. rose 5.1 percent. Samsung Electronics gained 6.1 percent and Hynix Semiconductor was up 3.8 percent.

The Google announcement, along with several other acquisitions announced in the U.S. on Monday, helped restore confidence in risky assets because such deals are interpreted as a sign that companies are more confident about the future.

The Dow Jones Industrial rose for the third day in a row Monday, closing up 1.9 percent at 11,482.90. The Standard & Poor's 500 index rose 2.2 percent to 1,204.49.

Benchmark oil for September delivery was down 99 cents to $86.89 a barrel in electronic trading on the New York Mercantile Exchange. Crude surged $2.50 to settle at $87.88 on Thursday.

In London, Brent crude for October delivery was down $1.08 to $108.72 per barrel on the ICE Futures exchange.

The euro dropped to $1.4375 from $1.4451 in late trading in New York. The dollar strengthened to 76.82 yen from 76.78 yen.


AP researcher Fu Ting contributed from Shanghai.

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